The dream of living overseas has gone sour for some, with costs rising by 11% on average since last year, increasing to 15% for people living amid the economic turmoil of the eurozone, the Post Office Expat Payments Index found.

Almost half of more than 900 expats surveyed said they were paying out more than 10% extra on household expenditure, motoring and meals out than last year. Nearly two in five thought that these prices had risen by more than 20%.

Nearly three quarters of expatriates also said the value of their home had remained static or fallen in the last year and one in 10 said prices had plummeted by more than a fifth. Three quarters of people said they were worried about the future and they would be forced to make significant cutbacks this year because of the dents in their finances.

Families living in the UK have come under intense pressure from high living costs, high unemployment and low returns on savings.

However, there are some signs of the situation easing, with the Consumer Price Index (CPI) rate of inflation dropping to 2.8% in May, the lowest level since November 2009.

The Post Office research found that Spain, Cyprus and Portugal have been particularly badly hit by high living costs.

Two in five expats living in Spain said the cost of eating out had risen by more than 15%, while 71% reported an increase of more than 10% year-on-year on fuel.

Nearly a third of those living in Cyprus said prices had risen by more than 20%, with food prices seeing a particular increase. Meanwhile, 22% of people in Cyprus said their home had fallen in value by more than a fifth.

Two fifths of people living in Portugal reported year-on-year rises in living costs of more than 20%. Four in 10 expats based in France said that their overall increase in costs was over 10%.